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Source: CNBC

An obscure exchange with connections to Justin Sun, WhiteBIT, has sparked concerns after advertising a staggering Annual Percentage Yield (APY) of 24.8% to users depositing Tether (USDT) for a year on its lending platform, Protos reported

This rate is five times higher than the average USD money market rate, a glaring red flag for potential investors.

WhiteBIT’s association with Justin Sun, a well-known figure in the cryptocurrency industry, raises further suspicion. 

WhiteBit’s Connection With Huobi

The exchange has established connections to Sun and his Huobi exchange, with funds flowing frequently between WhiteBIT and Huobi. This affiliation might explain the high APY figure, yet it offers little reassurance to those considering investment.

Justin Sun has a history of promoting exorbitant returns on dubious stablecoins. He has touted returns ranging from 150% to 392% on his USDD stablecoin, 2,366% on USDJ, 30% on USDC, and 23% on TUSD. 

This history of extravagant promises combined with WhiteBIT’s connection to Sun underscores the need for cautious evaluation.

WhiteBIT offers a range of over 150 cryptocurrency trading pairs and supports two lesser-known fiat currencies, the Ukrainian hryvnia and Kazakhstani tenge. 

However, the most eye-catching feature is its ‘lending’ platform, which boasts interest rates exceeding 24.8%. 

While higher interest rates generally indicate elevated risks, WhiteBIT has recently reported holding $1.59 billion in digital assets, with its own ICO token, WhiteBIT Coin (WBT), accounting for a significant portion.

Despite these figures, it seems implausible that users would choose to hold 99% of their assets in WBT, raising questions about the token’s legitimacy and its impact on the exchange’s overall credibility.

WhiteBIT’s access to fiat on- and off-ramps, particularly within Ukraine and Kazakhstan, could be considered its most valuable asset. 

The ability to convert stablecoin proceeds to fiat within these regions is a rare advantage. 

Furthermore, the availability of a Ukrainian or Kazakhstani checking account with a U.S. correspondent banking relationship is even scarcer, making WhiteBIT’s capabilities noteworthy.

WhiteBIT Faces Challenges Maintaining Licenses

WhiteBIT has faced challenges in maintaining licenses and banking relationships over the long term. 

Its two European licenses from 2019 have encountered 404 Not Found errors, and the exchange has experienced multiple delays in withdrawals, potentially raising concerns about its stability.

Despite these complexities, WhiteBIT’s co-founders lack experience as crypto executives. Vladimir Nosov, listed as the CEO, has limited information available on his LinkedIn profile, while David Tunian’s prior role seems to involve sales rather than executive leadership.

While the exchange claims to have supported events like the Eurovision 2022 trophy and Ukraine’s military efforts, its practices and affiliations warrant closer inspection.

WhiteBIT exchange’s connection to Justin Sun, its alluringly high APYs, and its unorthodox practices demand careful scrutiny. 

While it presents itself as an avenue for cryptocurrency trading and lending, its history, affiliations, and offerings raise valid concerns for potential investors. 

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